| (A) When local use taxes are due in addition to local
sales taxes as provided by subsection (c) of this section, all applicable
use taxes must be collected or accrued in the following order until
the two percent cap is reached: city, county, special purpose district,
and transit authority. If more than one special purpose district use
tax is due, all such taxes are to be collected or accrued before any
transit authority use tax is collected or accrued. See subparagraphs
(D) and (E) of this paragraph.
(B) If a local use tax cannot be collected or accrued
at its full rate without exceeding the two percent cap, the seller
cannot collect it, or any portion of it, and the purchaser is not
responsible for accruing it.
(C) If a seller collects a local sales tax on an item,
or a purchaser accrues a local sales tax on an item, a use tax for
the same type of jurisdiction is not due on the same item. For example,
after a city sales tax has been collected or accrued for an item,
no use tax is due to that same or a different city on that item, but
use tax may be due to a county, special purpose district, or transit
authority. Similarly, if one or more special purpose district sales
taxes have been collected or accrued for an item, no special purpose
district use tax is due on that item, and if one or more transit authority
sales taxes have been collected or accrued for an item, no transit
authority use tax is due on that item.
(D) Collection or accrual of use tax for multiple special
purpose districts. If more than one special purpose district use tax
is in effect at the location where use of an item occurs, the special
purpose district taxes are due in the order of their effective dates,
beginning with the earliest effective date, until the two percent
cap is met. The effective dates of all special purpose district taxes
are available on the comptroller's website. However, if the collection
or accrual of use tax for the district with the earliest effective
date would exceed the two percent cap, the tax for that district is
not due and the seller or purchaser should determine, following the
criteria in subparagraphs (A) - (C) of this paragraph, whether use
tax is due for the district that next became effective.
(i) If the competing special purpose district taxes
became effective on the same date, the special purpose district taxes
are due in the order of the earliest date for which the election in
which the district residents authorized the imposition of sales and
use tax by the district was held.
(ii) If the elections to impose the local taxes were
held on the same date, the special purpose district taxes are due
in the order of the earliest date for which the enabling legislation
under which each district was created became effective.
(E) Collection or accrual of use tax for multiple transit
authorities. If more than one transit authority use tax is in effect
at the location where use of an item occurs, and the two percent cap
has not been met, the transit authority taxes are due in the order
of their effective dates, beginning with the earliest effective date,
until the two percent cap is met. The effective dates of all transit
authority taxes are available on the comptroller's website. However,
if the collection or accrual of use tax for the authority with the
earliest effective date would exceed the two percent cap, the tax
for that authority is not due and the seller or purchaser should determine,
following the criteria in subparagraphs (A) - (D) of this paragraph,
whether use tax is due for the authority that next became effective.
(i) If the competing transit authorities became effective
on the same date, the transit authority taxes are due in the order
of the earliest date for which the election in which the authority
residents authorized the imposition of sales and use tax by the authority
was held.
(ii) If the elections to impose local taxes were held
on the same date, the transit authority use taxes are due in the order
of the earliest date for which the enabling legislation under which
each authority was created became effective.
(2) General use tax rules applied to specific situations.
The following fact patterns explain how local use tax is to be collected
or accrued and remitted to the comptroller based on, and subject to,
the general rules in paragraph (1) of this subsection.
(A) Sale consummated outside the state, item delivered
from outside the state or from a location in Texas that is not operated
by the seller - local use tax due. Except as provided in subsection
(i)(3) of this section, if a sale is consummated outside of this state
according to the provisions of subsection (c) of this section, and
the item purchased is either shipped or delivered to a location in
this state as designated by the purchaser from a location outside
of the state, or if the order is drop shipped directly to the purchaser
from a third-party supplier, local use tax is owed based upon the
location in this state to which the order is shipped or delivered
or at which the purchaser of the item takes possession. The seller
is responsible for collecting the local use tax due on the sale. If
the seller does not collect the local use taxes due on the sale, the
purchaser is responsible for accruing such taxes and remitting them
directly to the comptroller according to the provisions in paragraph
(1) of this subsection. For example, if an order for a taxable item
is received by a seller at a location outside of Texas, and the order
is shipped to the purchaser from a location outside of the state,
local use tax is due based upon the location to which the order is
shipped or delivered or at which the purchaser of the item takes possession.
(B) Sale consummated in Texas outside a local taxing
jurisdiction, item delivered into one or more local taxing jurisdictions
- local use tax due. If a sale is consummated at a location in Texas
that is outside of the boundaries of any local taxing jurisdiction
according to the provisions of subsection (c) of this section, and
the order is shipped or delivered to the purchaser at a location in
this state that is within the boundaries of one or more local taxing
jurisdictions, local use tax is due based on the location to which
the items are shipped or delivered or at which the purchaser of the
item takes possession. The seller is responsible for collecting the
local use taxes due on the sale, regardless of the location of the
seller in Texas. If the seller fails to collect any local use taxes
due, the purchaser is responsible for accruing such taxes and remitting
them directly to the comptroller.
(C) Sale consummated in any local taxing jurisdictions
imposing less than 2.0% in total local taxes - local sales taxes and
use taxes due. If a sale is consummated at a location in Texas where
the total local sales tax rate imposed by the taxing jurisdictions
in effect at that location does not equal 2.0% according to the provisions
of subsection (c) of this section, and the item is shipped or delivered
to the purchaser at a location in this state that is inside the boundaries
of a different local taxing jurisdiction, additional local use tax
may be due based on the location to which the order is shipped or
delivered or at which the purchaser of the item takes possession,
subject to the two percent cap. The seller is responsible for collecting
any additional local use taxes due on the sale, regardless of the
location of the seller in Texas. See subsection (i) of this section.
If the seller fails to collect the additional local use taxes due,
the purchaser is responsible for accruing such taxes and remitting
them directly to the comptroller.
(i) Example one - if an order is received in person
at a place of business of the seller, such that the sale is consummated
at the location where the order is received as provided under subsection
(c)(1)(A) of this section, and the local sales tax due on the sale
does not meet the two percent cap, additional local use taxes are
due based on the location to which the order is shipped or delivered
or at which the purchaser of the item takes possession, subject to
the provisions in paragraph (1) of this subsection.
(ii) Example two - if a seller receives an order for
a taxable item at a seller's place of business in Texas, and the seller
ships or delivers the item from an out-of-state location to a location
in this state as designated by the purchaser, local sales tax is due
based upon the location of the place of business of the seller where
the order is received. If the local sales tax due on the item does
not meet the two percent cap, use taxes, subject to the provisions
in paragraph (1) of this subsection, are due based upon the location
where the items are shipped or delivered or at which the purchaser
of the item takes possession.
(e) Effect of other law.
(1) Tax Code, Title 2, Subtitles A (General Provisions)
and B (Enforcement and Collection), Tax Code, Chapter 141 (Multistate
Tax Compact) and Tax Code, Chapter 151 (Limited Sales, Excise, and
Use Tax) apply to transactions involving local taxes. Related sections
of this title and comptroller rulings shall also apply with respect
to local taxes. This includes authorities such as court cases and
federal law that affect whether an item is taxable or is excluded
or exempt from taxation.
Cont'd... |
